Everything You Need To Know About A Certificate of Occupancy

SETTING OCCUPANCY LIMITS IN YOUR RENTAL PROPERTY
April 28, 2020
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Everything You Need To Know About A Certificate of Occupancy

Certificate of occupancy | Property Management Detroit

Whether you’re a landlord, tenant, or property manager, you would have encountered a Certificate of Occupancy along the way. A landlord, or property manager who does not know what it is, and its importance, could end up in a bad situation, maybe costly! ProWay Property Management is here to give you an overview of a Certificate of Occupancy, (C of O).

WHAT IS IT?

It’s a document that lays out the property’s legal use, and confirms the property meets local safety and habitability codes. They apply to residential and commercial properties.

So why are they such a big deal? Where a certificate of occupancy is required, no one is legally allowed to occupy the property without the certificate. Violating these laws can lead to fines. The inspection will cover the mechanicals, electrical, plumbing, heating, fire, functioning smoke detectors, proper permits, structural features and safety. 

The certificate serves three purposes:

Describes The Use

The property can be described as a residential building (which includes single-family and multi-family 4 units, or less), retail, commercial, industrial, or even a mixed-use property. Why is it important for the property to be used according to its classification? This is to prevent it from being used in a way it wasn’t intended for, and to make sure the property meest the appropriate standards and codes. For example, a property classified for residential use cannot run as a cafe or restaurant.

States The Property Is Suitable For Occupancy

The certificate of occupancy is proof the property is in compliance with state and local standards and codes, making it fit for occupancy. Depending on its intended use, this could provide occupancy for a residential, commercial, or retail tenant.

The Property Complies With Codes

The certificate sets the groundwork that the property conforms to all housing and building codes. 

WHEN DO YOU NEED IT?

Changing Property Owners

Whenever the property is transferred to a new owner, a certificate of occupancy will be required. 

Rental Properties

The owner of a rental property needs to receive a Certificate of Compliance, stating the property meets local safety and building codes, and is habitable for tenants. 

Remodeling

It’s quite common for most cities to require property owners to pull a building permit whenever they are remodeling their house. If the remodel is a major renovation project, a certificate of occupancy may also be required, to ensure the newly renovated house meets building codes.

New Construction

A newly constructed property will need a C of O to ensure the property complies with all local safety and building codes, and ordinances.

Property conversion

Changing the property’s use will require a C of O to ensure the new use property complies with all local safety and building codes, and ordinances.

WHAT ARE THE REQUIREMENTS?

The certificate is issued by the city the property lies in, usually by the building department or department of housing. It can’t be issued until the property has passed a series of inspections, which include:

Fire Inspection

The items included in this section are dependent on whether the structure is new or existing in terms of its construction. The inspector will typically look for fire-proofing between walls and ceiling. They mostly make sure that any construction-related fire hazards are taken into account. Any items that are needed in the prevention of fires, such as extinguishers, smoke detectors and fire exits, are checked to ensure they’re accessible and fully functional. 

Electrical Inspection

This is done to make sure the property has correct and safe functioning electrical work. They will check that the electrical box meets minimum amps, it is secured and grounded, that the wiring is correct and the outlets and switches are proper;y installed.

Plumbing Inspection

Plumbing inspectors will check that the pipes are copper, or pyrex, (most cities will make you replace galvanized pipes), that the pipes are connected correctly, water pressure, the water meter is hooked up and that faucets are properly installed.

Building Inspection

Building inspectors attend to items not related to fire, electrical, or plumbing codes. They usually check for things that might affect the property’s structure such as the foundation, drywall installation, siding, framing, roofing, and even stairs. 

The exterior will also be inspected, as will any other structures, like a garage. 

WHAT HAPPENS WHEN YOU DON’T PASS THE INSPECTION?

After the inspection, you will receive a report. The report may list items the city is requiring to be repaired, or corrected in order to receive the Certificate of Occupancy, or Certificate of Compliance. Depending on the city, you may be given anywhere from 30 days to 180 days to correct the deficient items. When you correct the items, the city will come back out to re-inspect, and if all good, issue the C of O. 

You cannot place tenants into your rental property, without a C of O, or Certificate of Compliance. Doing so could lead to fines. If the city discovers you placed tenants, and are receiving rent payments, they will demand you make the repairs, and will hold the rental payments in escrow, until the property is in compliance. 


Obtaining a Certificate of Occupancy can be a daunting task, if you are not prepared for what to expect. Knowing what will be inspected, and how to make sure you’re ready to pass it, is a big advantage. The best solution is to work with the right professionals to help you manage everything with your rental property. ProWay Property Management can help you with all your property management needs. To learn more about our services, contact us at (734) 744 – 5080 or send us an email at info@prowaypm.com.

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